Oman Investment Fund seeks government nod for UCX stake buy

MUMBAI: Oman Investment Fund (OIF), the Sultanate of Oman's sovereign wealth fund, has filed a fresh application with the government to buy a stake in Universal Commodity Exchange (UCX), promoted by software solutions company, IT People, a person close to the development said.

"The fresh proposal made by Funderburk 2 Mauritius , an OIF arm, relates to UCX," said the person, who did not wish to be named A single foreign entity can invest up to 5% in a commex. Funderburk Mauritius 2's investment proposal was slated for discussion last Friday by Foreign Investment Promotion Board (FIPB), which approves foreign direct investments into the country. A senior government official said the FIPB's decision will be known soon.

An OIF official acquainted with the matter was on vacation while Ketan Sheth, promoter of UCX, said he did not wish to comment.

OIF was earlier in talks with NSE to pick up half of its 10% holding in agri bourse NCDEX but these remained inconclusive till September-end, the deadline for divesting its excess stake. A stock exchange can hold maximum 5% stake in a commex. Government norms allow up to 49% foreign investment -- 26% FDI and 23% FII --in commexes subject to a 5% cap per investor. Fidelity is one of the foreign stakeholders in MCX, while Goldman Sachs, InterContinental Exchange and Crisil, a part of Standard and Poor's, hold small stakes in NCDEX.

UCX promoters had an August deadline for tying up Rs 100-crore equity capital, a year after receiving the government's in-principle approval to start operations. They sought an extension for roping in government companies as shareholders.

Forward Markets Commission (FMC), regulator of five national and 16 regional commodity bourses, has given them time till March to comply with commex equity structure norms.

The promoters need to sell around 16% to government companies to meet the 26% shareholding criteria for this class of shareholders. In July, they sold 10% to IDBI Bank for Rs 10 crore. Of the mandatory Rs 100-crore equity, Rs 65 crore has been tied up. Shareholders include IT People (40%), Indian Farmers Fertiliser Cooperative (15%) and IDBI Bank (10%).

A consultant advising foreign investors on potential opportunities in commodity futures market said a US-based PE fund recently enquired about investing in a top commex.

Turnover of the commodity futures markets in the financial year through December 15 stood at Rs 131 lakh crore, up 67% from the corresponding period of the preceding fiscal year. A bill seeking to empower FMC, a department of the consumer affairs ministry, is lying with a Parliamentary Standing Committee. Once passed, this is expected to open the floodgates for institutional participation in commexes.

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